The USCC launched a probe against Lenovo, but many wonder if the accusations are warranted

The United States government is planning to spend roughly
$13M USD on computers from Lenovo. The company, famous for buying up IBM's PC
manufacturing arm, is working on a deal with the US government to produce
roughly 16,000 computers. Just recently, the U.S.-China Economic Security
Review Commission (USCC) has requested that Lenovo be probed for any concerns
about possible spying, eavesdropping or worse.

The supposed problem presented by the USCC is that the 16,000 computers are
being built by a Chinese-mainland company. The USCC argues that a foreign
intelligence like that of the Communist Party of China (CPC) can use its power
to get Lenovo to equip its machines with espionage devices. Lenovo has strongly
declined that it is involved in any such activities.

Many analysts would call these probes are excessive and knee-jerk. When
manufactured under IBM, almost all Lenovo PCs were built in the People's
Republic of China and the Republic of China (Taiwan) to some degree or another
anyway. Of the top 10 system builders in the US, eight have some
component manufacture attributed specifically to ECS-Tatung, at Taiwanese
corporation that only assembles exclusively in the PRC. Of the other two
not represented by ECS-Tatung, Dell and Apple, Dell has a strong reliance on
ASUStek -- another company that builds exclusively in the PRC.

Despite the probe, Lenovo says that its international business, especially
those that deal with the US, follow strictly laid out government regulations
and rules. Lenovo also claims that even after purchasing IBM's PC division, its
international business has not been affected negatively. Interestingly, in an
interview with the BBC, Lenovo mentioned that an open investigation or probe
may negatively affect the way that the company deals with future government
contracts or bids. The Lenovo representative did not explain details on exactly
what negative implications would occur if there were future investigations. The
16,000 PCs to be built for the US government are actually assembled outside of
China in Mexico, Taiwan and Raleigh -- an oddity in the PC manufacturing
business.

A top tier motherboard manufacturer spokesman spoke to us off the record
claiming the Lenovo probe has "foreboding" implications. If US
companies are intimidated by probes of the USCC, such probes could be easily
applied to virtually every PC manufacturer in the US: Intel motherboards are
built by Taiwanese Hon Hai Precision Industries from facilities in Shenzhen;
Acer components are built by component manufacturers in Shanghai; Dell PCs are
assembled in factories in Suzhou and Shanghai. The same spokesperson went
on to say "We [Taiwanese manufactures] do more work in China than we do
anywhere else in the world. I don't even want to think about what would happen
to our US clients if we got a USCC probe."

CDW Government, the company originally contracted to fill the orders for the US
government also carries several brands that are assembled in the PRC including
Acer, BenQ, D-Link, HP, Sharp and Toshiba.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer